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Updated January 18th, 2020 at 09:31 IST

IMF chief warns return of Great Depression driven by inequality & fin sector instability

Kristalina Georgieva, head of the International Monetary Fund stated that the present global economy showed risks of a return of the Great Depression.

Reported by: Ananya Varma
IMF
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Kristalina Georgieva, head of the International Monetary Fund (IMF) made an alarming revelation while speaking at the Peterson Institute of International Economics in Washington. She stated that the present global economy showed risks of a return of the Great Depression.

According to Georgieva, the current economy was showing signs of inequality and financial sector instability. According to the IMF research, this was similar to the “roaring 1920s” that ultimately led to the great market crash of 1929. She also explained that while the inequality gap between the countries was reducing, the same within the countries was increasing. She warned that this excessive inequality within the countries could hinder growth and culminate in political upheavals. 

Read: Greek PM says IMF to close its Athens offices within months

Read: IMF meeting interrupted by 'Baby Shark' attack, hilarity ensues

The IMF head also warned that over the next decade issues such as climate crisis and increased trade protectionism could lead to social unrest and financial market volatility. While government spending to help those at the bottom is key she added that one could not overlook the financial sector, which could have a profound and long-lasting positive or negative effect on the inequality. 

Read:  IMF calls for 'urgent' action to reverse economic slowdown in India

China and India paved the way for economic gains

In a new study presented ahead of updated economic forecasts, the IMF highlighted how opening the access to the financial sector in China and India in the 1990s had helped “pave the way for enormous economic gains in the 2000s” Kristalina Georgieva, also spoke about this stating that this "helped in lifting a billion people out of poverty.” However, the IMF chief also cautioned against the excesses that led to the 2008 global financial crisis.

"The crisis has never ended, with one in four young people in Europe at risk of falling into poverty. There is no substitute for high-quality regulation and supervision. We are safer but not safe enough,” said Kristalina Georgieva. 

Read: IMF Economic Councellor Gita Gopinath meets PM Narendra Modi

Read: Social unrest hindered economic growth in Arab countries: IMF report

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Published January 18th, 2020 at 09:31 IST

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